Ep. 224: A Technology Slam Dunk: How GeoWealth is Changing the TAMP Game with Colin Falls

Come on in and sit back and relax. You’re listening to Episode 224 of the WealthTech Today podcast. I’m your host, Craig Iskowitz, founder of Ezra Group Consulting. This podcast features interviews, news and analysis on the trends and best practices, all about wealth management technology.

My guest for this episode is Colin Falls, founder and CEO of GeoWealth. Colin has been at GeoWealth for over 11 years before that, he was at a Midwestern RIA for two years and before that, right after graduating from Notre Dame, he played professional basketball in Europe for about a year and a half in Czechoslovakia and Italy. Gotta give him credit for that, you’re playing pro ball somewhere you’re playing pro ball. Gotta give him credit. Shocked he changed careers, why would you leave basketball for the RIA wealth management business? I don’t know. But we’re happy he did, otherwise he wouldn’t have GeoWealth around. We covered a lot of ground in this episode. We talked about their recent press release, I’m not going to spill the beans. You’ll hear it from him. We talked about their support for unified managed accounts, and how they built their technology from scratch there. We talked about alternative investment support, and we talked about new account opening lots of good stuff.

But before we get started, let’s talk about tech stacks. At Ezra Group, we’ve seen tech stacks of hundreds of RIAs and let me tell you, most of them are loaded down with tech debt. So you shouldn’t feel too bad about yours. But let’s face it tech debt is like a giant anchor, holding back your business growth. If you want to free your firm for exponential growth, you should run, not walk to our website EzraGroup.com and fill out the Contact Us form. Our experienced team can evaluate your current tech ecosystem, deliver targeted recommendations, optimize your existing systems and operations or run an RFP and help you implement new software to take your firm to the next level. You can take advantage of our free consultation offer by going to EzraGroup.com.

Topics Mentioned

  • Origins and Evolution
  • Competitive Analysis Insights
  • Building Functional Capabilities
  • Bridging TAMPs and Software Providers

Episode Transcript

Craig: I’m excited to introduce our next guest, founder and CEO of GeoWealth. Colin Falls. Colin, welcome to the program.

Colin: Hey, Craig, it’s great to be with you. I’ve been looking forward to being on for a while now. I’m glad we’re able to make this happen.

Craig: You know, Colin, we’re all busy. I’m glad you can make time for us here in the new year. Are you calling in from, looks like your Chicago office?

Colin: I am calling in from our Chicago headquarters. You know, we have about a little over a hundred people now across the company headquarters in Chicago, where we have the majority of the management and the operations and servicing. And then we have an engineering hub over in Europe, and then a number of people scattered across the country, which is just the new normal with the virtual work world.

Craig: I hear you, man. Ezra Group Consulting, we’ve always been virtual. We are a no office company, and we started 19 years ago, so we were a bit ahead of the curve. So I completely understand.

Origins and Evolution

Colin: Well, I joke we’re kind of the same. So when we launched in 2010, we were actually integrated with another RIA. It was a subsidiary of ours. And so I was in Kansas City and we had the office in Europe, in Bulgaria was our engineering hub, and we had just a few people,had a CTO, we had a CIO, we had a head of operations, and everyone was virtual. So we literally had no headquarters or roots. And we realized before we go to market, we had to invest in in a headquarters, a home office. I was from Chicago, certainly there’s a lot of talent in the area. So did it in reverse, we were a virtual company, realized we needed a more solid foundation. And so that was move to Chicago in 2013.

Craig: You and I met, according to my notes in 2017, and that’s when I got my first demo of the platform. And it was pretty early. I mean, but I could, I could tell that you had a lot going on and you were pretty ambitious in your goals. I was a little dubious to say, because it’s hard to build out all of this stuff as you know. But before we get into that, can you give us a 30-second elevator pitch for GeoWealth?

Colin: Absolutely. So GeoWealth is the modern TAMP for RIAs. And so when we think about TAMPs, there’s three core components. There’s technology, there’s the investment portfolio or portfolio solutions, and there’s these services and all three TAMPs have all of those, I think all kind of focus in different areas. Our core competencies is in the technology layer. So all of our technology proprietary we’re exclusively focused on RIAs. We really can serve at this point, RIAs from emerging startup RIAs, all the way up to $5, $6 billion, up to $10 billion RIAs. And we want to, you know really be the bridge between the traditional software as a service provider and the traditional TAMP and bring the best of those capabilities in one place.

Craig: That was a concise and well thought out answer, Colin. I appreciate that.

Colin: Well, I wanted to start getting into the why we built it before you asked that one and how we did it. I remember our conversation back in 2017, and it is interesting. At that time, we’d gone very wide, but we were focusing on rounding out a lot of the capabilities and we needed to build a new UI. So I’m happy to dig into there wherever you want to take it.

Competitive Analysis Insights

Craig: I mean we do a lot of software reviews. That’s something we’re big on. We do a lot of competitive analysis research here. So when I first met you, I still have my notes showing I was going through your rebalancer do this, this, this, this. You’re like, well, no, no, no, yes to this. No, no. I’m like, you guys are so far behind. But then, that’s what it takes when you’re starting out and you’re building out this wide breadth of capabilities, it just takes years to build it because it’s not an easy lift. But you’ve done well so far. Quick overview of that.

Colin: It’s interesting. I think that that’s why there’s not a lot of new entrants. If you look around portfolio accounting and specifically sub accounting systems in the space, there haven’t been a lot of new entrants in the last five to seven years. And the reason is it’s hard. It creates a higher barrier to entry. And so we started building the technology around 2008, 2009, and we invested in the foundation first. So think sub accounting building up to accounting and then incrementally built out all the capabilities, whether it was reporting or billing or trading systems. It’s more challenging to do that in the UMA structure than just your typical accounting structure. And so a lot of the advisor facing features were really built more in the last six or seven years where the first six and seven years were based on the foundation and the plumbing.

Colin: So I think when we talk at that inflection point, when we were going to market, we had a lot of the foundation built, but building out, you know, additional features on our rebalancer, our OMS, or our proposal still needed work. I view it as a a, a real competitive advantage for us that we have built it all from the ground. We understand every element of how the technology works and functionally even the operation side. When I started in 2010, I was doing the reconciliation, I was doing the billing reporting and trading. So understanding at our level, and Jack Hannah, who’s the president as well, how the sausage is made, I think it helps inform how to build the product.

Craig: It definitely does. I mean, we’ve built portfolio accounting engines, the specifications for portfolio accounting engines. And when people see the spec right there, they can’t believe how big it is. You don’t realize what goes on behind the scenes in portfolio account. That’s why when people tell me, oh, I got a call from a journalist from the Financial Times last week saying there’s an RIA that just is going to build their own portfolio management system. What do you think of that? I said, sounds like a stupid idea. Why? Because there’s so many of them out there. And it’s so hard to do and it’s not your core competency, but for you guys, you built it, you decided it was going to be your core competency.

Colin: Yeah and we were fortunate, we’re backed by a family office, so we had patient capital. I think oftentimes, whether private equity or venture, I think depending on what stage or how you get into it, we always had the vision that there was going to be an extended R&D period to build the breadth of the solution we wanted. And I think like you, anytime I hear a new portfolio accounting entrant or even like sub accounting entrant into the market, you’re skeptical just ’cause you know how hard it is and are they doing transaction based accounting? And so there’s nuances on all this. As you know, there’s so much noise in our space, it is the hardest thing to do is matrix out the capabilities based on providers because everyone represents that they have everything.

Colin: And then oftentimes look under the hood and realize, oh wait, they’re using this provider, or they’re using this provider. And so you just have to cut through that. But I also think as this has evolved as the tech side of this, and this better than me has become more mature. There’s been consolidation and there’s,, I don’t wanna say a dozen firms, maybe two dozen firms that stand out with portfolio accounting and capabilities. They’re differentiated in their own. I think there’ll be more consolidation. The best software companies are going to be the survivors here.

Building Functional Capabilities

Craig: Exactly. You mentioned tax lot accounting, the transaction processing engine, feed handle, or corporate actions, dividend reinvestments, we talk about fixed income and their eyes start to glaze over. We gotta do what, how do how do we build that reconciliation security master? So I was definitely impressed that you guys got through all of that and built a stable platform. There’s a lot of noise. There’s so many out there. I mean, I wrote an article five years ago already six years ago called 50 Portfolio Management Platforms Can’t All Survive, and more keep coming now. And there’s only so much market share. And you guys have done it an interesting way, that you’re focused on a TAMP, you’re not just selling software, you’re a TAMP that’s run by your own software platforms. So it’s a unique way of delivering it.

Colin: I think that that’s played out to some extent, right? If you think about the mark in 2010, it was a trillion dollars, I don’t know what it is today, trillion dollars, whatever it is. And it was very clear that what independent RIAs were looking for was modern software and architecture. And I think coming out of 2010, again, we were getting involved, everything was going from desktop to cloud, but those were still more immature companies on the software side. Now, a lot of them have scaled up and they have trillions of platform now. We always viewed it as there was an opportunity to bridge what these software providers brought to the table. And frankly, roboadvisors helped us in terms of better UI, better workflows, and what an RIA actually wants to do.

Colin: And so there was a chasm between a pure software provider and what a TAMP was offering. If you think about what when an RIA launches, what they have to address, they have to address technology and operations. They have to address investment solutions, and they have to invest financial planning. Most RIAs did not get in the business to be an operation in technology. And I think that part of the challenge is, and there’s a lot of great softwares out there, unless you’re a scaled $5-10 billion plus firm, the argument to do that yourself and use a software and operate it and invest in the operations and the redundancies, I think is challenged. And I think that the TAMPs that were in the market weren’t giving enough flexibility on the investment side that the RIAs just wouldn’t use TAMPs, right?

Colin: So it was almost like a fork in the road of, are you an RIA you’re going to use a software provider. If you’re a broker dealer, you’re going to use a TAMP. And our view is always, why don’t we bring them together? Why don’t you have to sell service technology plus the outsourcing, the efficiencies and automation and scale that comes outsourcing, and can you bring it together? And I do think that there’s tailwinds behind it, right? You’ve seen TAMPs acquire software providers, software providers acquire TAMPs. I think when it’s all said and done, most of them are going to be able to offer software and services with them.

Craig: That seems to be the way, at least the big players are going. If you look at the Envestnet’s and the Orion’s that have merged their software platforms with their TAMPs, they are moving in that direction, offering more services, more of an end-to-end platform, including CRM, including federal planning even insurance and others. So that’s something you guys are, are running up against, but you seem to be growing at a nice clip and that leads us into our next topic, which is your press release. You want to give the news here?

Colin: Happy to. We recently at the end of the year surpassed $28 billion on the platform, it’s about 28.5 we ended the year with across 180,000 accounts and a couple hundred RIAs. I think everybody going into 2022 had, ambitious growth expectations. And I think 22 is humbling for anyone that touched the wealth space. But I think at the same time, we were resilient in our client base, had very, very little turnover. We were able to grow. I think the challenge in 22 was, for us, was less the market and more advisors being heads down with volatility and focusing on their clients, which they should. And the idea of making technological or operational changes was a non-starter. It was nice to see in 2023 advisors get past that, stabilize their clients, the psychology around that and start thinking about growth and partners in the future. And I think we’ve just ridden that wave in terms of growth. It’s interesting like there’s clear product market fit that we’ve established in the last few years, and we feel like things are coming at us now in volumes that have never been there. So we expect the growth to continue. And are pretty excited about kind of this next chapter for the company.

Craig: Well, congratulations. That’s a big milestone. Almost $30 billion, not quite, almost there.

Colin: Almost. We have quite a large pipeline and new things coming on as well. But I told you, Craig, as we were joking before, every day is a grind, you know that, anyone in a startup business that’s scaling a business feels that way. You have to pick your head up and say, okay, we’re making progress. And if you look at it over a 1, 3, 5 year period, we’ve made a lot of progress, but I think we still have it in our DNA to grind every day and act like we haven’t done much and support our clients like they’re our first. I do think that’s helped us.

Craig: Let’s talk some tech. One of the things I like about your platform is you built out a support for unified managed accounts, UMAs not a lot of vendors of your size offer this, the big guys do, but not a lot of vendors your size do. Can you tell us so why you built that and some of the new feature functionality around your UMA that you’re coming out with?

Colin: I think there’s two, there’s a couple things there. Once, yes, there are vendors that built it and there’s some big ones. I think that what we did right, is that there’s two ways to do UMA. You could build an portfolio accounting system and then after the fact build sub accounting and connect your own master balance to it, that oftentimes is clunky. Because you’re connecting kind of disparate systems. What we did, I think correctly is we built the sub-accounting as like the underlying layer that built up to our accounting system. So there was never a scenario that we didn’t have UMA or sub-accounting. UMA is is just basically supporting sub-accounting to some extent, and then it’s all the products that you put into it. And so we built that from day one.

Colin: It’s allowed us to be flexible in terms of billing an UMA structure, reporting an UMA structure, investing. And the system, you know, if there’s any feedback we get sometimes that it’s a little too flexible in different cases, we’re not rigid in that you have to go into a UMA program and it’s set. It’s really building up from the subaccounting structure. So you could have models of models, you could have UMA, you could have assortment of just portfolios and carved out positions or cash on the sidelines. And so it, it is created tremendous flexibility for us. And I think that the next wave of innovation on that are what are the product types, the new investment solutions that we could bring into that that have traditionally been individual securities.

Colin: And so we’re getting closer to launching where you could have direct indexing in a UMA, you could have fixed income in a UMA, structured notes semi-liquid alts. And so we think that that’s where the world’s going is when we think about personalization. A lot of personalization as we think, if we thought about like the direct indexing platforms, they’re all built on traditionally single portfolio account structures. And we think that there’s need to be more flexibility in the future to get the benefit of personalization inside of UMA. So we think that’s kind of the new frontier we’re very focused on.

Craig: I would love to see those things. That’s a lot of interesting functionality security types, program types inside of UMA now fixed income we’ve seen, we have seen some other firms launch direct indexing. Direct indexing is really just like an SMA, like an SMA manager can run a direct index inside of a UMA no problem. Is there something special you’re doing with your direct indexing in the UMA that’s going to be different than just if the SMA manager was running 500 stocks in his SMA?

Colin: The difference is if you think about that, right, what does that require the advisor to do? It requires them to likely go dual contract directly with that subadvisor. And I think that’s the problem with direct indexing and just SMAs in general in a world where everything’s coming to integration and platforms. And so if you have to do everything to dual contract and go to your direct indexing provider, and that’s a siloed part of your business, that’s not run on your operating platform, it’s not the ideal experience. And so our view, there was an aha moment to some extent when we were working with the provider and they were like, alright, so I have my direct indexing accounts in one account. I have my fixed income in another and my funds and ETFs and another SMA and every year when I rebalance, I have to journal positions across 2000 accounts and rebalancing that takes two to three weeks. And so I just, I think we’re moving to a world where just in the way UMAs has benefited, equity SMAs and funds and ETFs, it’s going to have that same benefit across some of the newer investment solutions that have come to market.

Craig: We’d certainly like, to see that. So what you’re saying is there’d be some sort of direct indexing functionality on the GeoWealth side that would allow you to do the trading. So it would be just one contract with you. I wanna direct index on the S&P 500, my client doesn’t wanna buy any military stock, so take them out and you would just handle that.

Colin: Yeah, not necessarily. So the manager would still, the DI platform would still trade that sleeve. So, and again, that’s all being worked out. And again, I think we’re not far from an announcement on where we’re heading on this, but the idea would be that you’d have a UMA where we were trading some components of it, and there’d be a manager trading different elements where it’s more complicated.

Craig: Interesting. So that’s the old school UMA was all direct manager trading, back in the old days. And then UMA, the model based UMA enabled that to go away and the sponsors to take control with just getting now a spreadsheet from the managers and then they’re doing all the trading. And it’s still difficult. There’s some big firms who shall remain nameless, who still don’t do a very good job of manager direct to manager trading. They still have to rely on third party technologies. So how did you build that out on your end?

Colin: Well, it’s not completely built. If you think about it, the sub-accounting structure allows for it. And so for us, it’s more operational workflows that are required to, because just think about anything traded on our platform is easily sleeved out. Anything traded off our platform, if we understand where it’s coming from, we could allocate it to sleeves. And so, yes, the way we’re thinking about it is it all still comes through our chassis. It comes through our service center. There’s a streamlined workflow in terms of how the orders are, are generated or not even generated, but requested. And then we are going to execute the things that are more standard and liquid. And then the manager would have the ability, again, we’re not in the business of executing on the fixed income side.There’s a lot of complexities on direct indexing that some of the large direct indexing providers are very good at. And so the idea is to use our chassis to support it all, but from an execution standpoint, only do where we think we’re best suited, and then lean on third parties that, you know, we believe are specialized in the space and there’s different vertical.

Bridging TAMPs and Software Providers

Craig: That sounds like a good plan. If you don’t have to do everything yourself, why would you? Right. Bring in the experts. I’m looking forward to seeing all those features inside of the UMA on the GeoWealth platform at some point in the future. Moving on to other functionality. So you also recently acquired a TAMP. You you acquired First Ascent. Congratulations on that as well. Scott and his team are a great acquisition for you guys and regarding their tech, you are in the middle of onboarding, new account opening process, taking what they’ve got merging and what you have. Can you explain how that works and what the impetus behind that is? Yeah, and just for a second, maybe I’ll give you 30 seconds on the rationale because I think it leads into what we’re building. We met Scott and his team man, the years go by, we met him in the middle of 2022. And actually the conversation around, they used a different software platform. They were doing it themselves and offering a TAMP, and they were actually looking at us as potentially replatforming. Very quickly as part of that conversation, the way we came together is we were actually competing for a few prospects that were in the $30 to $50 million range. And what we realized is a lot of their capabilities were perfectly suited for the emerging RIA think $20 to $100 million dollars. And the reason is they did more than us in terms of they were more of a full service TAMP where they’re doing the account cashiering and the custodial relationship, meaning they also built, the only tech they actually built was an onboarder that was seamlessly like investment solutions, open accounts, all in one need, onboarder.

Colin: That lent itself to their business model and what attracted us is that we weren’t focused on that market, we’ll call it the emerging advisor market. And we saw it as an opportunity to expand and offer more services. And so as part of it, we got a great team, a great client base. They really have a great client base. In addition, it opens up, you know, more technological opportunity for us. So we have our own account opening capabilities, we have our own proposal, they have their onboarder, which has some of the same capabilities. And what we’re doing is we’re integrating that into ours. So it’s in one ecosystem, and you get the best of both worlds from a real, onboarding experience. Remember, a lot of these full service clients that are co-advisor don’t get to go to the custodian. They don’t have access. They would only have access through GeoWealth. And so we have to make sure it’s as seamless as possible in terms of how they interact with the custodians.

Craig: What is it you liked about the First Ascent onboarding, new account opening tech that made you want to replace your own?

Colin: I wouldn’t say it’s a replacement of our own. We’re actually taking some of their capabilities, embedding it inside of ours. And honestly, it’s just a lot of their new account workflow capabilities are better than ours, frankly. Our were built for enterprises to use that’s operated more like broker dealers. Theirs is built more for emerging RIAs. And there’s capabilities inside there that will be easy to integrate in ours. So we’re not taking their code, right? We’re taking their concepts and they have an engineer that works with them that’s now part of our team and accelerating and adding some of those capabilities around.

Craig: Oh, okay. So you’re not moving the actual code base over, you’re saying, yeah, great idea, we’re going to build that.

Colin: Yes, correct. Inside of our own and we can do it very quickly because, and again, ours is really solid, but this is just, there’s nuances to it, which I’d have to bring on the product side of the rationale of exactly what capabilities, but there’s definitely expanded functionality that we didn’t have.

Craig: Yeah. So that’s really just taking their ideas and rebuilding it, saying, Hey, we like how you did your onboarding. We like the process. We’re going to build that. We’re going to improve ours by building the way you built it, it’s more like intellectual property.

Colin: The person that built it is on our team now too. They built theirs on .Net, but we’re on Java. I don’t know how this is going to work. It just made sense to build in our system, right? It just to take a fresh look at it, build it in our UI/UX and that’s the plan.

Craig: Well, coming from a former CompSci major former programmer, when I hear .net and Java trying to work together, back of my neck, the hairs go up.

Colin: Well, you have more experience than me, Craig. I act like I know what I’m talking about in technology. I’ve never written a line of code in my life, but I’ve gotten close enough. It’s interesting. I think there’s developers and engineers, and there’s the business people, and I think that I know where to stay in my lane. I try and give input based on the experiences we’ve had, but I’ll get in my head very quickly on the technology side.

Craig: Yeah. You don’t have to know, right?

Colin: Exactly. Exactly.

Craig: Yeah. You need to know the basics. That’s important. I’ve been around so long. I was there when C# was released, like in 2001 or something like 2002. I don’t know. That’s when C# first came out.

Colin: I was a sophomore in high school.

Craig: Yeah. You see, the stuff still works and Java is even older, right? I mean, so it’s the age of a programming language doesn’t relate to its viability and how, whether you should use it or not. I mean, I think Java was created by Sun Microsystems in the nineties, ’94 or something. So it’s even older than C#. I’m old enough that I was using Java when it first came out. I was excited. Woo. Java. Anyway, we can reminisce all day. But we’ve got a couple more minutes. Let’s talk about some of the other cool things you guys are doing alternatives, integrations with iCapital. We love talking about integrations. Can you talk a little bit about that and what that involves and how you did it?

Colin: It aligns with the theme of historically we’ve served a more ambassador, fluent end client base, and as we add capabilities to go upstream over high net worth and ultra high net worth investors, there’s a different set of reporting requirements that come with that. And so we’ve over overhauled our reporting engine and a reporting suite in the last couple years. And as part of it again with more fixed income accounts, we’re going deeper on fixed income reporting and all the nuances there in fixed income likewise with alts. And so there’s two parts to the alts, right? There’s building the report, which is actually kind of the easier part where you’re having things like committed capital and MOIC that are just very alternative driven in terms of metrics and reporting, the harder part’s, actually the data connectivity. We’ve recently integrated with iCapital who’s the leader in the space in terms of access. And so our view is to compliment what we’re doing in terms of capabilities we’re building for the upstream end client. We have to improve or expand our capabilities on the reporting side to align with what their expectations will be when using those services.

Craig: Something we’re seeing more and more firms doing. The alt space is exploding with new vendors. I mean, iCapital is one of the leaders, there’s a lot of other players who are buying for them. Like CAIS is also out there and every large vendor’s got some connectivity to alts and there’s lots of small ones coming out. So when you do the data connectivity, was that difficult to do, what was, what was involved in that?

Colin: It was relatively straightforward. Not, not much different. Like in the way I view it is just like, we’re going to support every RIA custodian, we’re going to be able to support the alt platforms, and we just treat them as a custodian from a data vendor standpoint. So similar to that, I would say the differences are, there’s unique uniqueness in terms of the fields they send you because of the alt specific reporting. But, but it was a similar process. So we feel like, we could expand with the industry in terms of where client assets are to make sure that everything’s in one place or all aggregated in one place.

Craig: That’s what happens when you’re playing with the big boys, Colin, you gotta start getting into all these other esoteric stuff, right?

Colin: Yeah. It’s, and it, and Craig you know this, it’s the hardest part of the job, right? It is like, okay, we’ve gone wide, you’ve got to keep going deep in all these functional areas. What are the things on the fringes you’re willing to expand to? We’re not going to do financial planning. We’re not going to do CRM, like, it’s going to be the portfolio management system and everything that comes along with that. And so we need to be focused on that. And then as we grow, we’ve been able to expand the resources too. We have, I think north of 40 engineers now close with our product team, we have 50 people dedicated to the product. We’re planning to continue to expand that. e’re in a different stage than having seven or eight engineers, like last time we talked to you in 2017 or the first time we talked to. We’re able to tackle more, but then there’s more maintenance and everything, so how it goes on the software company, but I feel like we’re positioned and we have the right people to execute against it.

Craig: Colin, that’s awesome. And we’re now out of time. Can you please tell listeners where they can find more information out about GeoWealth?

Colin: Absolutely. So geowealth.com is the best place, and there’s interactive things on the website where you could request a demo or introductions. Feel free to visit our website or call our home landline number at (312) 219-9160. Feel free to give us a call or look us up on our website.

Craig: Excellent. Colin, thanks for being here.

Colin: Thanks Craig, always a pleasure. I’m looking forward to coming back at some point, talk about all the things we just discussed.

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The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com

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